Gold Price Forecast: XAU/USD bulls approach $1,860 hurdle on firmer sentiment, softer US dollar

• Gold defends the first weekly gain in five inside short-term bullish chart formation.
• Repeated Fedspeak, risk-on mood weigh on the US dollar ahead of FOMC Minutes.
• Yields, stock futures print gains amid mixed clues, quiet session in Asia. 
• Gold Weekly Forecast: XAU/USD starts reacting to US yields but bulls remain hesitant

Gold (XAU/USD) picks up bids towards an intraday high as bulls benefit from the downbeat US dollar, as well as a firmer mood, during a quiet Asian session on Monday. That said, the precious metal snapped a four-week downtrend while bouncing off the two-year low at the latest as the greenback bulls took a breather amid mixed data and repeated chatters of a 50 bps rate hike, as well backed by the optimism in China.

Multiple Fed policymakers, including Chairman Jerome Powell, refrained from a 75 bps rate hike calls while defending their previous projections of the half a percent increase in the Fed rate during the next few meetings. The same joins mixed US data and cautious optimism in the market to weigh on the US dollar.

Shanghai’s gradual unlocking and the mainland’s reduction in the covid cases, as well as the virus-led deaths, underpin optimism for the gold buyers, due to China’s status as one of the world’s largest gold consumers.

That said, the US Dollar Index (DXY) flashed the biggest weekly loss since January, not to forget snapping a six-week uptrend, down 0.22% on a day near 102.80 by the press time.

The DXY weakness ignores recently firmer US Treasury yields, up to three bps around 2.81% by the press time, by justifying the 1.0% gain of the S&P 500 Futures.

Given the risk-on mood and the downbeat US dollar, the gold price may extend the latest recovery moves. Though, the monthly PMIs and Minutes of the latest Federal Open Market Committee (FOMC) will be crucial for clear directions.

Technical analysis

A clear upside break of the monthly falling channel joins firmer RSI (14) keeping the gold buyers hopeful inside a one-week-old rising channel formation.

However, the 100-SMA level surrounding $1,852, quickly followed by the stated weekly channel’s upper line near $1,860, restricts short-term XAU/USD upside.

On the contrary, pullback moves remain elusive beyond the support line of the aforementioned channel, at $1,825 by the press time.

Gold: Four-hour chart

Trend: Further upside expected